Profit Maximization Strategy for Healthy Bars Package

What is the profit-maximizing price to charge for the package of Healthy Bars?

A. $12 B. $8 C. $20 D. $16

The profit-maximizing price to charge for the package is $8.

To determine the profit-maximizing price for the package, we need to find the quantity that maximizes the profit function. The profit per package (PP) can be calculated by subtracting the cost per package (CP) from the price per package (P). The cost per package is constant at $3, so CP is always $3.

Given the demand function Qd = 10 - 2P, we can find the expression for the total revenue (TR) by multiplying the quantity demanded (Qd) by the price per package (P).

To find the quantity that maximizes profit, it is necessary to calculate the derivative of the profit function with respect to the quantity, set it equal to zero, and solve for quantity. Once the quantity is found, it can be substituted back into the demand function to determine the price per package that maximizes profit.

After solving, we find that the profit-maximizing price to charge for the package is $8.

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